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You need to remember that there are a couple different licenses we're talking about here. Not all apply to karaoke directly because of the unusual nature of the beast itself.
Based on information from a variety of sources at different karaoke manufacturers the initial investigation into the synchronization license is done with a phone call and a hand shake. They work out the details as the disc goes into production in the studio. They finish up the studio work and send out the gold disc for pressing. It comes back and is sent out to distributors for further sales to the general public. Sometimes the licensing gets hosed up at the last minute after the disc has shipped. This is similar to what happened with the Sound Choice 8125 - Eagles disc. The person they talked with originally verbally granted rights but when the agent checked with Don Henley he denied the rights.
There are other rights for distributing songs - Master Use Rights, Mechanical Reproduction Licenses, Digital Licensing, Performance Licenses and many more.
The playback disclaimer for public performance no longer applies when proper licenses have been obtained from ASCAP, BMI, or SESAC.
On a side note, MP3's purchased from most 'legal' MP3 retailers are not legal for playback and purchase by a commercial entity is a violation of the terms of use agreement. It requires written permission to use the tracks by a commercial entity. Same applies for YourMusic.com and the BMG Music Club. The CD's you purchase through them are not legal for playback no matter what licenses you obtain. It's a direct violation of the terms of use agreement with the company and they can refuse to sell to you as a commercial entity or as an individual if you transfer the product to a company for use.
It's a strange world with all the licensing and such... but after lots of reseach I was only more confused!
And in my discussions with a couple lawyers the general concensus was that a purchaser of an unlicensed CDG was NOT liable because of the unnecessary amount of effort required to determine if licensing was obtained. It's generally assumed that licensing was obtained prior to production of the product and the manufacturer would be held liable for the entire run of product. It's also not cheap to prosecute the crime in civil court so going after the end user isn't practical. Civil torts generally go after the person with the deep pockets.
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